Part 1 The simple Trend Line
As regular readers will know, we use technical analysis to complement rather than define their understanding of the markets. Each market trades uniquely and none stand still. So although helping new Traders to develop their own style of trading is of paramount importance, experience shows that keeping technical analysis simple and unambiguous is key to achieving consistent profitability faster.
Enter the simple trend line.
All of us when presented with any form of chart will naturally impose mental trend lines on the price movements we see- it is the only way the human mind can make sense of such large data series. This sometimes leads us to find order where there is none however, and so an essential precursor to attempting to make sense of a price chart is to absorb yourself in your market. Learn who and what drives it; study it intently every day; and begin to understand its behaviour. This essential pre-condition is the reason we incorporate small daily trading sessions from its very beginning. Once the understanding of price behaviour is instilled, charts can be used efficiently and trends can be drawn appropriately. The noble idea of a random walk died out long ago, and it is now widely accepted that prices have a tendency to trend directionally. This after all is how and why we are able to make a living as professional traders.
The great advantage we have as free-thinking discretionary traders is flexibility. We are not bound by rules, and we trade our views. Trend lines can help maintain perspective when price action is strong and seemingly moving against a view held with conviction. Smaller price movements against an underlying trend, and strong activity at the extremes of range-bound markets are normal and healthy, but do not always feel like it at the time- great trades are rarely easy to hold. A good trend line drawn in advance maintains objectivity, and enables optimum entry and exit of positions, with risk clearly defined in advance. Just as important, an objectively drawn trend line quickly tells us when we are wrong, or when the market has changed. As professionals we exit the instant conditions dictate and without regret.
-not public yet-
-written in english-